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CISI-Managing Operational Risk in Financial Institutions
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Question 1 of 10
1. Question
Which of the following statements justify a BIPRU firm right to use the capital resources used to meet the requirement of base capital resources to meet any other aspect of the demand for capital resources?
Correct
This is meant to serve as a floor to the need for capital resources, in practice, the need for vital human services is meant to increase the need for financial resources.
Incorrect
This is meant to serve as a floor to the need for capital resources, in practice, the need for vital human services is meant to increase the need for financial resources.
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Question 2 of 10
2. Question
A corporation will inform the FCA of its plan to submit a financial transaction that it wants to provide within its capital resources in writing. A organization will provide notice when:
Correct
Acknowledge the phase of the capital resources table in which the capital instrument is to fall, if it is anticipated that the capital will be allocated to outsourced creditors or within their group.
Incorrect
Acknowledge the phase of the capital resources table in which the capital instrument is to fall, if it is anticipated that the capital will be allocated to outsourced creditors or within their group.
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Question 3 of 10
3. Question
If an organization decides to set up a debt securities plan for the issue of financial instruments for integration into its capital wealth, it must:
Correct
Notify the developer’s FCA about the implementation and include the requisite details at least one month before the original scheduled pullback.
Incorrect
Notify the developer’s FCA about the implementation and include the requisite details at least one month before the original scheduled pullback.
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Question 4 of 10
4. Question
A BIPRU business shall not include financial services in its Tier One risk instrument if:
Correct
A shareholder-stopper has an effect on the capital instrument and the distribution stopper operates in a way that hampers bailout, a shareholder-stopper has an effect on the capital instrument and the shareholder-stopper has a detrimental impact on the capital instrument and the distribution stopper operates in a way that eliminates recapitalization.
Incorrect
A shareholder-stopper has an effect on the capital instrument and the distribution stopper operates in a way that hampers bailout, a shareholder-stopper has an effect on the capital instrument and the shareholder-stopper has a detrimental impact on the capital instrument and the distribution stopper operates in a way that eliminates recapitalization.
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Question 5 of 10
5. Question
The FCA finds that the financial resources of a BIPRU company are not maintained because, inter alia, the terms of the replacement payment are:
Correct
The deferred payment shall be charged without delay using one securities newly issued core tier with an aggregate fair value of no more than the coupon number.
Incorrect
The deferred payment shall be charged without delay using one securities newly issued core tier with an aggregate fair value of no more than the coupon number.
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Question 6 of 10
6. Question
The FCA must usually take into account, among other factors, the following when considering the financial and solvency condition of a company:
Correct
An adequately organized system of 3-5 years of capital, including the effect of the proposed coupon payment, the firm’s financial and solvency position before and after the payment of the coupon, in particular whether that payment, or other foreseeable internal and external events or circumstances, may increase the risk of the firm breaching its capital resources requirement or the overall financial adequacy rule and an evaluation of the risks to which the firm is or might be exposed and whether the level of tier one capital ensures the coverage of those risks, including stress tests on the main risks showing potential loss under different scenarios.
Incorrect
An adequately organized system of 3-5 years of capital, including the effect of the proposed coupon payment, the firm’s financial and solvency position before and after the payment of the coupon, in particular whether that payment, or other foreseeable internal and external events or circumstances, may increase the risk of the firm breaching its capital resources requirement or the overall financial adequacy rule and an evaluation of the risks to which the firm is or might be exposed and whether the level of tier one capital ensures the coverage of those risks, including stress tests on the main risks showing potential loss under different scenarios.
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Question 7 of 10
7. Question
A business may not include a financial instrument in its capital management tier one, unless its contractual terms are such that:
Correct
The business can not exercise this right of redemption unless it complies with, and will have to do so after redemption, the laws of the central BIPRU organization Pillar 1 at the point of exercise of that right.
Incorrect
The business can not exercise this right of redemption unless it complies with, and will have to do so after redemption, the laws of the central BIPRU organization Pillar 1 at the point of exercise of that right.
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Question 8 of 10
8. Question
A business may include a word in a tier one instrument which will allow the company to redeem it before the date if the following conditions are met:
Correct
The circumstance requiring the exercise of the right by a company constitutes a change in the tax treatment or regulatory classification applied to such instruments.
Incorrect
The circumstance requiring the exercise of the right by a company constitutes a change in the tax treatment or regulatory classification applied to such instruments.
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Question 9 of 10
9. Question
A BIPRU corporation shall not purchase a tier one instrument which it has included in its tier one financial resources unless:
Correct
A BIPRU business shall not purchase a tier one instrument which it has included in its tier one financial resources unless the organization has notified the FCA and (in the case of hybrid capital) on or after the fifth anniversary of the issuance of the instrument.
Incorrect
A BIPRU business shall not purchase a tier one instrument which it has included in its tier one financial resources unless the organization has notified the FCA and (in the case of hybrid capital) on or after the fifth anniversary of the issuance of the instrument.
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Question 10 of 10
10. Question
Under what conditions may a company not include capital resources in its tier one share?
Correct
In terms of its resource characteristics (including loss absorption, permanence, repayment value and fixed costs) a company does not include capital resources in its Tier One share (for any other company).
Incorrect
In terms of its resource characteristics (including loss absorption, permanence, repayment value and fixed costs) a company does not include capital resources in its Tier One share (for any other company).